Savings Experiment: Snow Removal
The Money Man Behind Rick Santorum: Who Is Foster S. Friess?Homeowners and home builders hoping for a sign that home prices have hit bottom won't get their wish anytime soon, according to S&P/Case-Shiller home price index. Bloomberg reports today that home prices fell another 4.4% in August - a fall in prices for eight consecutive months. Economist Merry Grauman told Bloomberg, "This is really the No. 1 risk: a sustained, sharp decrease in home prices really squeezing consumers."
The squeeze to consumers will put a dent in consumer spending, which has up to now kept us out of a recession. I've heard from people who provide luxury services that they too are seeing a drop in business. Expect to see very weak economic news over the next few months. The only silver lining to this cloud will be a drop in interest rates -- which everyone expects from the Fed this week. The only question seems to be: how much? On Sept. 18 the Fed reduced the interest rate from 5.25 to 4.75 -- the first cut in four years.
The S&P/Case Shiller index looks at 20 metropolitan areas. Tampa, FL saw the biggest drop year over year - 10% followed by a 9% drop in Detroit. Seattle saw the biggest gain - a 5.7% increase.
If you are trying to sell your house in this depressed market, find out what sale prices actually have been in the most recent six months. Ask yourself if you can live with that price. If not, you need to figure out a way to stay in the home or rent it. Of course, you have the third option of walking away from the house, which some people are choosing to do, but remember if you choose to do that it will stay on your credit report for at least seven years and hurt your ability to get any type of credit. Also, remember that just because you walked away from a house, if the bank is not able to recover the value of your mortgage, it may have the right to go after you for any cash shortfall and any shortfall could be taxed as income.
Lita Epstein has written more than 20 books including "The 250 Questions You Should Ask to Avoid Foreclosure" and the "Complete Idiot's Guide to Improving Your Credit Score" (due out in December).
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
10-30-2007 @ 12:49PM
Jjjaaazzzyyyy said...
I've had all I can stand of the "American Dream", it's more like a nightmare.
10-30-2007 @ 1:06PM
Inge said...
fyi....NOTE that Seattle is still going UP
Dad
10-31-2007 @ 9:40AM
Christiane said...
Unfortunately, I think we are in for many more months, perhaps years, of declining prices due to the supply of homes in most markets. Our company, HouseBuyerNetwork.com, is on the front lines assisting motivated homeowners sell their homes quickly. We find that our traffic is up over 35% and that the value of the homes that are presented is also increasing. This means that homeowners in a different economic group are beginning to feel the problems associated with the down turn in housing. As the inventories rise the problem is exacerbated and affects a broader spectrum of homeowners. It is a disturbing fact that we hope will not become a trend of its own.
11-01-2007 @ 1:55PM
Harrell said...
As a real estate broker for 30+ years (now retired) I remember the President Jimmy Critter (Carter) fiasco when interest rates were @ 17%+++, if you could even find a lender, and prices plummeted. It took 5-7 years for the market to recover. Now we're looking at the upside down situation but with the same result - declining, and in some cases plunging, prices. You can now rent for about half of what it would cost own - no real estate taxes, no insurance, no liability, and no cost or long time wait to change residences or relocate. What went wrong? The lendinging industry had billions that were literally shoveled out of the door with no concern for the future. What were they thinking (or what were they drinking or smoking). The American public has just gotten a wakeup call, now its time to get out of bed and get to work. The current real estate situation is a "tar baby" and there isn't any easy way out. People have lived off their home equity but now the banquet is over.
11-01-2007 @ 2:13PM
Chuck Haley said...
I'm a Realtor in Pennsylvania. This market is impacting me like no other since 1975.
I'm also a boater though with the rise in gas prices I'm not boating so much anymore. I receive boater magazines and one in particular advertises several locations in the Bahama Islands where investors are building homes that start at $12,000,000.00, that's no typo.
Could this type of lending be affecting us here?
It seems as though this declining market is not affecting everyone.
Point being, how can American investors be doing so well only 50 miles off the coast of Florida when the mainland can't stay out of foreclosure?